Hrpd705 | Strategic Compensation | Assessment Answers
The Scenario
Your Challenge
You are a top-notch team of compensation professionals employed at a leading compensation consulting firm. Your team is so highly respected that two of your company’s major clients, Duplox Copiers Canada Limited and Zenith Medical Systems Incorporated, are vying for your services. However, because of all your commitments, you will be able to take on only one of these clients, so one of them will be out of luck. Your boss is in the process of deciding which client will get your services and will give you a decision shortly.
Your Mission
Your mission is to analyze your client firm, identify the sources of the problems the firm is facing, recommend any necessary organizational changes, formulate a new reward and compensation strategy, and design and implement a compensation system that will maximize your client’s success. Due to the magnitude of your task, you will complete this project in three phases. At the end of each phase, you will submit a report to your client and give a brief presentation describing your analysis and key recommendations to that point.
In Phase I, you will analyze the current organizational system, identify problems and their causes, propose solutions, outline an effective reward and compensation strategy, develop and apply a job evaluation system for some jobs, and develop a pay-for-knowledge system for other jobs. (Your client has seen pay-for-knowledge plans at other organizations and wants to try one but wants to apply it to only a limited number of jobs to see how it might work.) Currently, your client firm does not use either job evaluation or pay for knowledge; it simply relies on a rather haphazard form of market pricing.
Phase II will involve calibrating your compensation system to the market and applying market data to the pay structures that flow from your compensation strategy, job evaluation system, and pay-for-knowledge plan. The result of Phase II will be a pay structure that provides a pay range for every job at your client firm, including the actual dollar values for base pay, performance pay, and indirect pay that will be provided for each job.
Phase III will involve operationalizing the new compensation system by fleshing out your performance pay and indirect pay plans, adjusting compensation of current employees into your new system, and developing procedures for the implementation and ongoing management of your compensation system.
Develop your reward and compensation strategy. You need to define the type of employee behaviours that your client firm needs, define the role that compensation will play in producing those behaviours, determine the compensation mix, and determine the compensation level.
Answer:
Reward and recognition strategy
Type of employee behaviour
It is important for the Duplox Copiers Canada Limited needs to maintain a certain employee behaviour in terms of the type of Achiever. This specific behavioural type of the employees is comprised of a number of characteristic features. For an example, they are well-linked, well-adjusted and competent workers who works with a sense of humour. Moreover, it can be asserted that the decision making power of this kind of employees is free from any kind of personal gains and intricately based on the interests of the organisations (Boiral, Raineri & Talbot, 2018). Moreover, the adaptability and get along with other types of behaviour make the employees more flexible and efficient.
Role of compensation
In this regard, compensation and reward plays a pivotal role to develop achiever behaviour among the employees. In this regard, the role of the organisation is to encourage the employees. Moreover, retention of the skill and efficiency are also identified important aspect on which the Duplox Copiers Canada Limited must follow. In this context, the compensation strategy plays a crucial role in order to reduce the turnover of the employees and makes them more concerned about the organisational profit (Gupta & Shaw, 2014). As a matter fact, compensation and reward is used as encouragement through providing monitory benefits for the employees. As a result of that the employees become highly satisfied and intend to be committed towards the Duplox Copiers Canada Limited.
Compensation mix
Base salary
It is comprised with the motive to provide the employees the minimum compensation in terms of base salary. Therefore, the base salary is identified as a fixed pay that portrays individual role and responsibility, experience and expertise and generate effective performance so that both the employee and the organisation generate profit equally (Pepper & Gore, 2015).
Annual incentive compensation program
The annual incentive compensation program is associated with the rewards for achieving the annual business goals by an individual employee. Moreover, it can be stated that there are some variables that influences the annual incentive compensation program (Balsam et al., 2016). In this context, the variables are based on the targets and the opportunities that the employees can be exploited by showing their exquisite performances.
Long term incentive program
This program is relied up on the stock based awards connected with the retention of the employees and the increase in the stakeholders’ value over a long period of time (Pepper & Gore, 2015). Therefore, it can provide incentives and awards to the employees on the basis of the employees’ loyalty and performance for the organisation.
Benefits
Besides all these incentives and award programs it can be argued that there are another sort of monitory benefits the employees can enjoy by exposing their credibility and potentiality. Addition programs like the monthly rewards and recognitions can be offered to attract and retain the valuable employees in order to generate more profits for the organisation (Balsam et al., 2016).
Compensation level
Job Family: For all the job families
Total compensation Level: Match the market
|
Compensation component |
Projected proportion of total compensation |
|
1. Base pay
|
40% |
|
a. Job evaluation
|
15% |
|
b. Market pricing
|
12.5% |
|
c. Pay for knowledge
|
12.5% |
|
2. Performance pay
|
40% |
|
a. Individual performance pay
|
20% |
|
i. Piece
|
3% |
|
ii. Commissions
|
5% |
|
iii. Merit bonus
|
7% |
|
iv. Special incentives
|
5% |
|
b. Group performance pay
|
15% |
|
i. Gain sharing
|
4% |
|
ii. Goal sharing
|
8% |
|
iii.Other group pay
|
3% |
|
iv. Organisation performance pay
|
5% |
|
v. Profit sharing
|
2% |
|
vi. Stock plan
|
1.5% |
|
vii. Other organisation pay
|
1.5% |
|
3. Indirect pay
|
20% |
|
i. Mandatory benefits
|
7% |
|
ii. Retirement benefits (pension plan)
|
4% |
|
iii. Health benefits
|
5% |
|
iv. Paid time off
|
1% |
|
v. Employee services
|
2% |
|
vi. Other benefits
|
1% |
Reference
Balsam, S., Boone, J., Liu, H., & Yin, J. (2016). The impact of say-on-pay on executive compensation. Journal of Accounting and Public Policy, 35(2), 162-191.
Boiral, O., Raineri, N., & Talbot, D. (2018). Managers’ citizenship behaviors for the environment: a developmental perspective. Journal of Business Ethics, 149(2), 395-409.
Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), 1-4.
Pepper, A., & Gore, J. (2015). Behavioral agency theory: New foundations for theorizing about executive compensation. Journal of management, 41(4), 1045-1068.
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